International trade and foreign direct investment: empirical testing of the trade–environment triangle

Abstract

The debate on growth and development has largely been argued during the seventies and eighties over the world. Subsequent to the eighties and nineties, the concern shifted towards the global environment through the emphasis on pollution and other forms of environmental degradation. Thereafter, the entire development debate has been revisited from the point of view of trade, development and the environment. The existing literature, however, is both incomplete and uncomplicated in as much as it does not relate these three vital dimensions of the trade–environment debate with each other. This paper attempts to verify empirically the triangle consisting of the Environmental Kuznets Curve (EKC), the Pollution Haven Hypothesis (PHH) and the type of economic development. EKC challenges the intuitive dichotomy between development and environment whereas PHH emphasises the implications of global foreign direct investment for the environment. The findings are in accordance with the new literature, which forms the basis of the trade, environment and economic development triangle at the global level.

Keywords:

• Trade and environment
• environment and development
• global FDI
• Environmental Kuznets Curve
• Pollution Haven Hypothesis

Disclosure statement

No potential conflict of interest was reported by the authors.